Buying a car should really be as simple as AmazonJuly 20, 2012 8:46 PMSubscribe

How exactly does one buy a car (first timer's edition)?

After 13 years, the old reliable car I've had since I got my license is finally starting to be more trouble than it's worth and I'm ready to purchase a new one on my own. I'm in the process of getting quotes from dealerships right now and have a pre-approval certificate from my credit union. But once I have the quote I want, how do things actually proceed? Should I talk to the credit union first and they'll transfer the money to my account? Or do I go to the dealer and say "Here's a check. Don't cash it for a few days while I talk to my bank?" The credit union mentioned I should ask for a "five day option" contract to allow them time to get me the money. And then once I have the car, do I transfer my old plates to the new one or do I need new plates from the DMV? I thought I was pretty good as far as negotiating the price goes, but the whole logistics of the thing is a bit over my head. Please explain it to me as if I'm 16 (because five year olds shouldn't drive…). I'm in California if it makes a difference.

There are two ways to handle the financing of a car with a credit union/bank loan. As an aside, you shouldn't necessarily immediately reject dealership financing. The vast majority of the time, it is a ripoff, but sometimes manufacturer rate subsidies can make it something to consider.

Option 1) Most banks will only do car loans for a fixed amount. You would negotiate a price with the dealership, then drive over to the bank, then bring the amount to the bank, and complete the loan process there. The bank will give you a check written out to the dealership, which you will exchange for a car. I would suggest talking to the bank before you start the process so the bank officer will help you out, but I've seen banks do a complete car loan from start to finish on the order of an hour if you just want to do it fast.

Option 2) Some banks will pre-approve you for a loan of up to a certain amount. They then give you a blank check that is written against the bank's account (ie, not you). You then negotiate with the dealership for a price. When a price is reached, you fill out the check details, and hand it to the dealership.

When my wife and I bought our last car (late model used, in Ohio), we paid the down payment to the dealer directly, and then the dealer faxed the signed purchase agreement to the credit union which took over from there. I believe the dealer sent a courier to the credit union office to deliver the title and get a check for the balance due, but that all happened after we'd left with the car.

Plates are transferable (in Ohio, anyhow) but the registration is not; you'll need to re-register those plates to the new car before you can legally switch them over. The dealer can do this for you (for a fee) or you can get a temp tag to tide you over until you do it yourself.posted by jon1270 at 3:12 AM on July 21, 2012

The first thing you want to do is determine the exact car you want and the price of the car. Start by basing your loan requirements on MSRP. If it's a $20,000 car, add $200-$300 for associated fees, plus tax based on how your state taxes cars (usually based on where you live).

Next, take that figure to your bank/credit union and ask for a loan in that amount. They'll issue a credit memo or something similar to that. Take that back to the dealership, work your deal, then hand the finance manager the check / memo and they will clear it with the bank.

I'll second the point about not poo-poohing the dealership financing out of the gate. Especially if it is a new car there are a lot of manufacturer incentives and low interest rate offers that you may qualify for if they're available. Often those rates are significantly better than even a credit union can offer.posted by tgrundke at 5:29 AM on July 21, 2012

I'll likely be purchasing my first car from a dealership soon, and I plan on following the advice of cebailey's ALMOST-perfect car buying experience. It is rather thorough, and covers things like playing CU and dealership financing off of each other to scrounge the best deal.posted by carsonb at 7:05 AM on July 21, 2012

He used to have a whole book about it, that I insisted people read, but I think it's out of print now.

Please. Do it. There are so many ways you can get taken advantage of in this process.posted by intermod at 9:47 AM on July 21, 2012 [2 favorites]

When I last purchased a car (about 7 years ago in IL), my credit union knew I was looking and pre-approved me for a certain amount. When I found the car I wanted, I was able to negotiate with them so the total price of the car would be the exact amout I saw online - including all of the fees and taxes and whatever they needed to get me new plates. I believe I signed some sort of paperwork at that point, but didn't put any money on the table. I then went to the credit union, where they gave me a cashier's check for the exact amount. I returned to the dealership and left with my new car and temporary plates - the new ones arrived in the mail a few weeks later.

Sometimes it is good to go with dealer financing for a 0% option. But, if they offer $X rebate or 0%, you should crunch the numbers and see if it would be advantageous to take the rebate and a loan from somewhere else (assuming the rebate is not contingent on using their finance company).

Also, don't be afraid to walk away if something about the transaction is squicking you out. I nearly walked away when the salesman suggested I bring my father to negotiate, because as a man he would know that I couldn't get the car, including taxes and fees, for the price I was asking. When the guy saw he was going to lose the sale - and my business since I had always purchased my cars from this dealership - I got exactly what I was asking for.posted by youngergirl44 at 6:46 PM on July 21, 2012

I just bought a car, in California, a month ago. I also had an old car that was 13 years old. Here was my process:

1. Researched cars online, narrowed it down to around 5 of them. I had figured out my budget before that so I knew they were all within my price range, some of them far more comfortably than others.

2. Started test driving. You can see other AskMefi advice about that process in a thread I started. I test drove all of the models I was interested in in about 3 days of each other.

3. While I was doing that, I went to my credit union and got pre-approved for a loan that would cover me to the top of my price range but was still an amount I was comfortable with. I wanted to negotiate strongly on the final price of the car without considering any dealership financing.

4. Narrowed down my choices to two that I liked a lot. One was more expensive than the other, but I liked it a little more. Then I did HELLA research. I looked at all of the car sites that tell you invoice pricing. I did all of the math. Then I did it again. I knew exactly how much I would pay for each of those cars, what that would mean for my payment and whether that was generally a good deal or not.

5. I emailed the sales manager of the car I liked more, told him I was interested in the car I had driven there last weekend and could he give me a quote. We went back and forth on email for a couple of days while I drove down the price and he tried not to let me. Ultimately, we agreed to a final price not including my trade-in, which he hadn't yet seen (though I gave him the details, he obviously couldn't value it sight unseen). The price we got to was actually LESS than my ideal price by about $750. I agreed to buy the car at that price.

I think this is the key: do it via email. You absolutely can do that (or go to a dealer who will) and it's just way easier. It lets you have time to digest their offers, do more math, have a think about it in a far less pressure-filled situation. There are also things you can read about how to play one dealer off another but I didn't do those things because the car I choose was only available at about 2 local dealers and only this one had the options I wanted. And they agreed to the price!

6. My credit union had offered me a convenience check. So once I knew what I was buying I went into the office and signed some paperwork and picked it up. Basically, it's a blank check from me but with the dealer name and amount blank. It could be used at any franchise dealership in the state up to a pre-set amount. They told me they were stopping that service so I was actually in under the wire - they stopped it a couple of days later. Its a shame because it's so much easier, so definitely ask about it.

7. The next morning I went into the dealership, they appraised my trade in (for what I expected), we confirmed the previous negotiations and then I did the finance paperwork (though no financing, they didn't try to push it at all since I had the check right there). I wrote the check out to them in the full amount and that was it. The credit union gave me all the instructions for how the check needed to be made out and handled particularly making sure that the dealer registered it with them as the lienholder.

If I hadn't had the blank check from the bank apparently the process is more like: go to dealer, get sale contract, go back to bank to get them to write a check in exactly that amount, go back to dealer with check and then get car. The money does not go into your account.

8. Call my insurance company to change my insurance from the old car to the new one. That was all done over the phone - they sent me a new set of insurance cars and a bill for the difference in a couple of weeks.

The plates stay with the car - so my car has a temporary registration until I can find a wrench to put on my new plates which came on Thursday. The dealership submits the paperwork to the DMV for you.

I think that covers it. I didn't know what the process was either - it's okay to ask for detailed instructions, everyone wants it to go well as they all have a stake in you buying a new car!posted by marylynn at 7:54 PM on July 22, 2012 [5 favorites]

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